Spike in flour prices not so sweet for bakers

The skyrocketing cost of flour has Shirley Wydeck hotter than her commercial-sized oven.

"It goes up every couple weeks," said Wydeck, a production manager at Ryke's Bakery, 1788 Terrace. "Is it tough? It sure is. It's scary."

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Wydeck said her store has passed along "slight" price increases to customers.

"Otherwise, it would drive us right out of business," Wydeck said. "We don't want to put it all off on the customers, but we don't know how far our costs will go up."

"We have been evaluating it just to be safe," she said. "I haven't gotten feedback from anyone that they're upset."

She said many farmers have turned away from producing flour because corn is more lucrative, given America's trend toward ethanol fuels. She said that has pushed supply-and-demand out of whack for bakers.

Legislation that mandates tripling ethanol production also hurts the wheat market. More farmers will plant corn, cutting wheat acreage.

John Sommavilla, president of Cole's Quality Foods Inc. in Muskegon, said it's difficult for his company to pass off price increases to customers.

But slight increases have been needed in recent months, given the cost of flour, he said.
"When you come out with a price increase these days, you better be loaded to the barrel with information and data on why you would even think about a price increase," said Sommavilla.

Customer reaction will be gauged over time, he said.

"If we're going to see any kind of decline in our business, it would be in the next year," he said.

There are other economic forces at play.

"There's competition for the land, crop failures in other countries and not so great crops in this country," said Brian Doyle, president of King Milling Co. in Lowell. "Last year, the U.S. had poor crops because of weather."

Mike Fassezke, vice president of the flour milling division for Star of the West in Frankenmuth, called it the perfect market storm.

The situation is so dire that bakers are banding together to march on Washington protesting high commodities prices, including wheat.

Different types of wheat produce different types of flour.

"Each of those markets are having their own issue at the moment," Fassezke said. "There's no simple answer."

Index funds that purchase commodity futures are looking to invest in wheat.

"They have huge pools of money, and they will invest in the market if they think it's going up," Fassezke said.